Reed Smith Newsletters

Welcome to our newsletter, with a summary of the latest news and developments in German employment law.

Case law updates

Extended working time recording obligations for German employers: On 13 September 2022, the German Federal Labour Court (Bundesarbeitsgericht – BAG) announced an extension of the employer’s obligation to record working time. In December 2022, the court published the full reasoning, providing further guidance on what is required from German employers. The BAG stated that, with immediate effect, employers are obliged to introduce a system for recording the entire working time of their employees, i.e., the start time, duration and finish time of their work, as well as break periods and any overtime. The BAG decided that, for this purpose, it is not sufficient to provide employees with a working time recording system – employers also have to ensure that the system is properly applied. Employers are still allowed to delegate the time recording to employees, but random checks will now be unavoidable. These employer obligations exist irrespective of the size of the company and of the existence of a works council.

Equal pay and gender pay gaps: In a decision dated 16 February 2023, the BAG stated that equal pay is not a matter of negotiation. In particular, the BAG decided that the requirement of equal pay for the same work cannot be circumvented by skilled wage negotiations. According to the decision, the employer could not successfully claim that the higher base salary of a male colleague was not related to gender, but to the fact that the male colleague had negotiated a higher salary during the job interview. The court considered this a violation of the prohibition of pay discrimination based on gender. Consequently, the BAG decided that the female employee was entitled to a higher base salary, as well as compensation under section 15 (2) of the Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG) due to gender discrimination.

Equal pay in case of part time employment: On 18 January 2023, the BAG announced a decision which strengthens the principle of equal pay for equal work. The background to the claim was that a provider of an emergency rescue and ambulance service employed paramedics on either a full time or part time basis. While the employer could issue directions regarding the working time and shift plan to the full time paramedics, the part time paramedics were free to sign up for and/or accept or decline requested shifts. Due to this difference and the claimed higher administrative effort in planning the deployment of the part time paramedics, the employer paid a reduced hourly wage to the part time paramedics, despite their having the same qualifications as the full time paramedics. In its decision, the BAG found that this practice violates the prohibition of discrimination without objective reason set out in section 4 (1) of the Part Time and Fixed Term Employment Act (Teilzeit- und Befristungsgesetz – TzBfG) and required the employer to pay the claimed additional compensation.

Limitation period of three years also applies to financial compensation claims for accrued holiday: At the end of 2022, the BAG ruled that holidays provided for under an existing employment relationship cannot be time-barred if employers do not fulfill their duty to inform. They must inform their employees of their holiday entitlement and notify them that the entitlement will expire if no holiday request is submitted. This transposed a ruling from the European Court of Justice (ECJ) into German law. Based on that ruling, some employers feared a flood of lawsuits over the payment of accrued holiday entitlement under employment relationships that had ended years earlier. In its ruling on 31 January 2023, the BAG clarified that a limitation period of three years continues to apply to financial compensation claims for accrued holiday after the end of an employment relationship. Longer limitation periods temporarily apply to old cases, i.e. to compensation claims that arose before the ECJ ruling of 6 November 2018.

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